So, you’ve got your business off the ground and it’s growing, but you’re working all hours just to keep pace with the growth you’re experiencing. It’s a nice problem to have, but one you’re going to need to address quickly if you’re to capitalise on your success, move your business on to the next level – and avoid burning yourself out.
The solution is obvious; you need more manpower in your business to help you deal with your expanding workload, but what’s the best way to bolster your resources? Should you outsource / contract out discrete tasks or employ staff?
We’ll consider both options in a moment, but before you decide either way, there’s something else you’ll need to do first.
As soon as you have other people working in your business – irrespective of whether you’re outsourcing work to them or employing them directly, it will be essential to undertake training and equip yourself with the management skills you’re going to require.
These will include learning how to delegate effectively, so you can be certain work will always be delivered to your exacting standards in all respects, and understanding how to get the most out of one-to-one communications – vital when you have to discuss performance and progress
While skills like these are obvious pre-requisites if you plan to employ, they might not immediately come to mind in the context of outsourcing. But whether you’re briefing out work to an employee or a third-party contractor, it must be done properly. In either case, unless expectations and parameters are clearly communicated and understood, it could cost your business time, money and reputation.
To Outsource or to Employ Staff?
Now, assuming you’ve acquired your management skills, let’s return to our original question. Should you outsource or employ? There is no definitive answer – what’s best for your business will depend on your individual circumstances, personal preferences, and future plans.
- Outsourcing Tasks
For many businesses in their early days, outsourcing can be a relatively straightforward solution to help deal with expansion. Outsourcing gives you the ability to quickly alleviate growing pains by briefing out tasks which are not cost-effective for you to do, you’re not good at, or you simply don’t enjoy.
Once you’ve identified what these things are – admin, bookkeeping, marketing or sales for example, you can set about finding a partner to outsource them to. Using a specialist for these kind of tasks makes good commercial sense – they’ll do the job more efficiently than you, leaving you more time to focus on areas that will make a real difference and generate more income for you.
Because you only buy in what you need, outsourcing gives you complete flexibility, allowing you to scale up or down in line with workload. But perhaps the biggest advantage outsourcing has over employment is that it doesn’t require you to make a long-term commitment, so if a relationship doesn’t work out for any reason, there’ll be minimal impact to your business.
Outsourcing allows you to develop a network of trusted partners who can help you to grow your business, but it’s not simply a case of delegating. To ensure you’re getting the quality and standards you require, you’ll need to have a good understanding of areas you brief out – which is why brushing up on your management skills will be key.
- Employing Staff
For all the benefits of outsourcing, you can never expect an outsourced partner to have the same passion as you do for your business. Inevitably, they’ll be focusing on developing their own business, and you’re likely to be just one of many clients they supply their services to.
On the other hand, employees who are carefully selected, properly supported, and who share your values and vision, can be genuine partners on your journey, helping make your business much more than the sum of its parts.
Unlike an outsourced partner who is project-focused and billing you by the hour, an employee is with you for the long-term, so it’s worthwhile investing in training and development to create an even more cost-effective asset. And in return for helping employees improve their skills and realise personal goals, you’ll develop a loyal and productive team who will assist you in moving your business forward.
Many business owners delay employing because they believe it will be too expensive, but in fact it can be a very cost-effective option. When you outsource, you’ll pay a sales price, calculated to include your supplier’s profit margin and allowances for things like training and development, but when you employ, the salary you pay will be a cost price.
The ‘gig economy’ and zero hours contracts have made the workplace far more flexible than it used to be, and there’s a pool of talent out there looking for work they can fit around their life – ad-hoc, part-time or term-time, so you don’t have to jump in and take someone on full-time from the get-go.
In addition, Employer’s National Insurance is not paid on salaries up to £8k, and for salaries over this limit, most small businesses will be able to claim an allowance exempting them from the first £3k anyway – meaning you could pay out up to £30k in salaries without having to pay Employer’s NI.
Another concern can be workplace pension legislation, but at the moment, employers only have to pay 1% of pensionable income, and the first £600 of an employee’s pay is exempt.
If you decide it’s time to employ someone, you will need to take advice from an employment professional on your legal and financial obligations. You should do this too if you opt to outsource a task which is going to be a regular piece of work, as this may count as employment in some instances.
Ready to Grow? Let’s Go!
At Inca, we focus exclusively on working with owners of micro and small businesses, surrounding them with all the advice and support they need to realise their full potential. We can help you decide it the time is right to grow your business, and whether outsourcing or employing is best for you.
If you’re ready to take your business to the next level, talk to us about our Growth Package option. It contains everything you will need, including a programme of free workshops, introductions to third parties who can help you on your journey, and pre and post-year-end discussions to ensure you stay on track.
Call us now on 0123 586 8888 to find out more!
